Boeing Offers Weak 2016 Outlook; Shares Tumble

The lowered outlook threatens to erode Boeing's advantage over rival Airbus, but things are looking up in China.

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NEW YORK—Boeing warned Wednesday that company revenues and aircraft deliveries could fall in 2016 and forecast profits well below what analysts were expecting after a fourth-quarter slowdown last year.

Shares of the aerospace giant fell 6.5% to $119.68 in midday trade after it projected 2016 commercial aircraft deliveries of between 740 and 745, down from a record 762 in 2015.

That would mark the first decline in deliveries since 2010.

Shares fell as low as $115.02 earlier in the session.

Boeing said it expects flat to slightly lower 2016 revenues and core earnings per share of $8.15-$8.35, well below the $9.43 expected by Wall Street analysts.

The world's largest aerospace company offered a largely optimistic outlook on the medium- and long-term market for commercial aircraft, saying global economic growth "continues at a moderate pace."

Speaking in a conference call with analysts, Boeing chief executive Dennis Muilenburg said the company's airliner clients were putting in new orders at "a moderated but healthy pace" and that deferral and cancellation requests are "well below the historic average."

Muilenburg said air travel continues to rise in China, where "the market opportunity is significant."

The lowered 2016 outlook on deliveries threatens to erode Boeing's advantage over rival Airbus, which said on January 12 that it expects 2016 deliveries to rise to 650 aircraft from 635 in 2015.

Airbus reported a substantial edge in net orders last year, 1,036 for the European maker versus 768 for Boeing.

Production of its best-selling 737 will be in"transition" in 2016 as it introduces the new version, the 737 MAX, said chief financial officer Greg Smith.

Deliveries of the single-aisle aircraft were down to 120 in the fourth quarter from 126 in the third quarter, according to Boeing's results.

But Boeing said monthly production of the sought-after 737s will rise from 42 in 2016 to 47 in 2017 and 57 in 2019.

Boeing is also transitioning its long-range 777 to the new 777X and foresees production of seven per month starting in 2017.

That rate is below the level the last two years. In the fourth quarter, output fell to 21 from 27 in the third quarter.

On January 21, Boeing said it was cutting production of the 747-8 freighter in half, to one plane every two months, due to falling demand in the air cargo market.

It took a $569 million charge for the output cut against fourth-quarter earnings.

Boeing said fourth-quarter net income was $1.0 billion, down 30% from the year-ago period. Sales fell 3.7 percent to $23.6 billion.

Fourth-quarter earnings per share of $1.60, nevertheless, were well above market estimates of $1.27.

For all of 2015, the Chicago-based company had net income of $5.2 billion, down five percent from a year ago.

Annual earnings per share also handily beat expectations by 32 cents, at $7.72.

The company's 2015 revenues also came in better than expected, up 5.9% to $96.1 billion.

Discuss this Article 1

One thing everyone needs to realize; the media, and even many of the stock/business "experts", have not come to grips with Boeing no longer being just a commercial jet maker. It is hugely diversified across many technologies and industries since the merger with Rockwell and McDonnell Douglas in the 90s. Why the annalists only talk about commercial aircraft is beyond me.